This article forms part of CAER’s  ‘Responsible Investment Agenda 2019 – A Work Plan for Australian and New Zealand Investors’ Report

The amount of waste we produce is rising and it is having a significant impact on our eco-system. Discussions around possible waste management solutions are high on the agenda, especially in light of the recent bans on foreign imports of waste introduced by China and other Southeast Asian countries. Australia, which used to redirect the bulk of its waste to China (until January 2018), now faces increasing pressure to develop an adequate waste management system to deal with a rising stockpile of waste. CAER believes 2019 represents a turning point for waste management.

Socio-environmental impact of waste and emerging risks for companies

An increase in population commonly leads to an increase in waste. “It is therefore unsurprising that waste generated in Australia has increased significantly over the last decade: in 2006–07, 57 million tonnes of waste was generated; in 2014–15 this had increased to 64 million tonnes.”[1]

Amongst all types of waste, plastic pollution is of utmost concern, largely due to its quantity, low value and non-degradable nature. Companies who contribute significantly to plastic pollution are exposed to serious material business risks including[2]:

  • Reputational risks as they can be perceived as exacerbating the problem.
  • Transition risks as the waste crisis deepens, fast-moving regulation toward a circular economy will require a rapid response and potential operational overhauls.
  • Physical risks from the presence of plastic pollution impacting infrastructures, workforce productivity and supply chain leading to resource scarcity and impacts on other industries such as aquaculture (fish catch and vessel damages).
  • Liability risks if the enterprise isn’t able to face legal challenges from parties having experienced loss or damage due to plastic pollution. Insurance companies protect themselves from potential liabilities which could include plastic pollution.

Although the recycling of materials is increasing, “landfills and incinerators are widely used to manage the final phase of waste disposal”[3]. For this reason, reducing the amount of disposable waste produced alongside developing innovative technologies to reclaim and reuse waste are imperative to preserving our planet.

A shift in Australia’s attitude toward waste and resources

One year on from the China ban, the recycling market is struggling to deal with the amount of waste generated and Australia is still thinking about its domestic processing capabilities[4] and the potential to create jobs in this sector. The main problem resides in the fact that multi-million-dollar facilities are not easily built without the insurance of an existing market.

To reduce waste to landfill and encourage recycling, a range of measures have been taken in Australia so far:

  • The 2018 National Waste Policy provides a strategic national framework and principles for waste management and resource recovery in a circular economy to 2020[5]. The report mentions that information ‘on where Australia’s waste comes from and where it goes’ needs improvement with such data being “critical to business investment” and influencing consumer behaviour’[6].
  • In addition, the Product Stewardship Act 2011 provides a framework to effectively manage the environmental, health and safety impacts of products – in particular, those impacts associated with the disposal of products.
  • A local initiative run by the NSW government entitled “Waste Less, Recycle More” is Australia’s largest waste and recycling program funded through the waste levy[7], delivering value-for-money waste infrastructure for households and business. The introduction of the container deposit schemes is also a great illustration of the government’s commitment.

It is likely that the trend towards plastic reduction will be legally reinforced in the coming years[8] influenced by the multiplication of advocacy groups tackling plastic pollution ― like Greenpeace’s campaign #banthebag[9] ― and by consumer behavior. These changes will have a significant impact for all companies with plastic in their supply chain, as they will be more vulnerable to the financial risks with not being able adjust their operations to new regulations.

Companies like Coles and Woolworths are already facing increased pressure to minimise plastic packaging. According to Hermes and Impax, “firms such as Pepsi, Unilever, Nestle, and Coke, which have been found to be among the top sources of waste in countries with insufficient collection infrastructure, face significant and material reputational risk[10]”.

A space of opportunities for companies in Australia

An upside to the dysfunction of Australia’s recycling industry are the opportunities available to companies.

An Opportunity to Re-evaluate

The waste crisis provides an opportunity for some manufacturers to re-think their entire operations ― from their products, and services to their client relationships ― to create a more “environmentally friendly product” and reduce production costs. Forward looking businesses are already implementing product stewardship principles by minimising their products’ environmental impact throughout all stages of its life cycle. Eliminating waste throughout the manufacturing process can be beneficial as a means of minimising disposal costs.

Qantas Airways has set a target of 30% reduction of waste to landfill by 2020. To achieve this the company has introduced recycling on international services and reduced plastic on every flight with the launch of plastic-free headsets and pyjamas. With millions of tonnes of passenger waste produced per year the company has become sensitised to consumer pressure and undoubtedly the cost of waste disposal[11].

An Opportunity to be Innovative

The problem of dealing with waste can be reframed as an opportunity to innovate, pushing companies to maximise its value. For instance, there is a latent market in Australia for waste-to-energy facilities[12]. Leader in the space, Macquarie’s plants will be the first of its kind to turn waste into energy for commercial sale in Australia[13]. French utility company Suez has also reached an agreement to supply a waste-to-energy plant close to Perth[14].

Leading the way in reducing operating costs, driving emission reduction, aligning with customer advocacy and creating new business opportunities, Telstra has deployed several means to reduce its energy consumption and related CO2 emissions, like upgrading and redesigning their old network sites. The company has also introduced an electronics reuse and recycling strategy (FY2017-19) to apply product stewardship and circular economy principles to E-waste generated in their supply chain and offers Telstra customers the opportunity to recycle their E-waste.[15]

The Impact on Investment

The goal of transforming the waste sector into a regenerative system where resource usage, emissions, and waste are reduced cannot be achieved without increased investment. Minimising waste generation requires innovation in product design, production processes, resource recovery, remanufacturing, recycling, and final treatment – much of which requires new or adjusted facilities.

When engaging with companies on waste, investors should consider the following:

  • What is the company’s approach to reducing hazardous waste?
  • How is the company managing its environmental impacts regarding use and disposal of products/services?
  • Is the company providing services that will help solve the waste problem, including waste collection and waste treatment?
  • Has the company prepared for the possibility of a change in regulation?
  • Is the company engaging with consumer demand?

Read the full ‘Responsible Investment Agenda 2019 – A Work Plan for Australian and New Zealand Investors’ Report

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[1] Australian Government Environment and Communications References Committee, Never waste a crisis: the waste and recycling industry in Australia (June 2018):  <> [Accessed, 31/01/2019].

[2]  ClientEarth, Risk unwrapped: plastic pollution as a material business risk (July 2018): <> [Accessed, 04/02/19].

[3] World Health Organization, Waste and human health: Evidence and needs (November 2015): <> [Accessed, 31/01/2019].

[4] Jenni Downes, ‘China’s recycling ‘ban’ throws Australia into a very messy waste crisis,’ The Conversation (27 April 2018): <> [Accessed, 25/01/2019].

[5] Australian Government Department of Environment and Energy, National Waste Policy (2018): <> [Accessed, 31/01/2019].

[6] Dominic Cansdale, ‘What’s changed one year since the start of our recycling crisis?’ ABC News (11 January 2019): <> [Accessed, 01/02/2019].

[7] NSW Environment Protection Authority, Waste Less, Recycle More (2016): <> [Accessed, 31/01/2019].

[8] Ella Milburn, ‘Attention has turned onto plastics pollution but what can investors do?’ Responsible Investor (23 January 2019): <> [Accessed, 25/01/2019].

[9] Greenpeace, Australia’s plastic problem: what, why & how? (25 September 2017): <> [Accessed, 25/01/2019].

[10] Ella Milburn, ‘Attention has turned onto plastics pollution but what can investors do?’ Responsible Investor (23 January 2019): <> [Accessed, 25/01/2019].

[11] Quantas Group, Our Planet (2019): <> [Accessed, 04/02/2019].

[12] Dominic Cansdale, ‘‘Big potential’ for waste-to-energy, but caution urged,’ ABC News (25 January 2019): <> [Accessed, 30/01/2019].

[13] Australian Renewable Energy Agency, Australia’s first energy-from-waste plant to be built in WA (18 October 2018): <> [Accessed, 13/02/2019].

[14] Elisa Iannunzio, ‘Energy-from-waste facility operation contract awarded,’ Energy Magazine (9 January 2019): <> [Accessed, 13/02/2019].

[15] Telstra, Resource use, waste & e-waste (26 July 2016) : <> [Accessed, 04/02/2018].

Justine Muller

Author: Justine Muller